GST Refund Blocked by Portal Glitch? Court Says: Reapply Fresh

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Case Name

M/s Lupin Ltd Vs The Union of India

Court Name: High Court of Telangana 

Case No.: W.P. No. 21405 of 2020

Decision on: 07th September 2022

Before: Hon’ble Sri Justice C. Praveen Kumar and Hon’ble Sri Justice A.V. Ravindra Babu

Key Takeaways

1. Zero-rated supplies to SEZ units are eligible for IGST refund under Section 54 of the CGST Act, 2017 read with Rule 89 of the CGST Rules, 2017.

2. Procedural compliance matters — even if you’re entitled to a refund, you must follow the correct procedure for filing the application, including submitting supporting documents electronically as per the updated circular.

3. CBIC Circular No. 125/44/2019-GST dated 18.11.2019 changed the refund filing process, requiring electronic submission of refund applications along with supporting documents from 26.09.2019 onwards.

4. Technical glitches on the GST portal can create genuine hardship for taxpayers, but the solution offered by the court was pragmatic — file afresh rather than fight over the old rejected application.

5. Consent-based disposal — both parties agreed to the court’s direction, making this a cooperative resolution rather than an adversarial one.

Issue

The central legal question here is:

Was the rejection of the petitioner’s GST refund claim valid, given that the refund application was shown as “processed” on the portal and the petitioner was unable to re-file due to a technical glitch?

More specifically:

• Was the Department justified in rejecting the refund claim (via Form GST RFD-06) on the ground that supporting documents were not submitted?
• Should the petitioner be allowed to file a fresh refund application despite the procedural complications caused by the portal issue?

Facts

Who is the Petitioner?

The petitioner is a manufacturer and exporter of medicaments/pharmaceutical products falling under Chapter 30 of the Central Excise Tariff Act, 1985. After GST was introduced in 2017, they migrated to the GST regime and got registered under the CGST Act, 2017.

What did they do?

They supplied goods to SEZ (Special Economic Zone) units and paid IGST on those supplies under Section 7(5) of the IGST Act. Such supplies are classified as “zero-rated supplies” under Section 16(1)(b) of the IGST Act, which means the petitioner was entitled to claim a refund of the IGST paid.

How did the refund process work initially?

Since the electronic refund module on the GST common portal wasn’t available right away after GST rollout, a temporary mechanism was put in place. The petitioner was required to:

• File the refund application in Form GST RFD-01A on the common portal,
• Take a printout, and
• Submit it physically to the jurisdictional tax office along with supporting documents.

The petitioner did exactly this and received acknowledgments from the department.

What went wrong?

In February 2020, when the petitioner tried to submit physical documents for their refund claims, the Department refused to accept them. The reason?

A CBIC Circular dated 18.11.2019 had changed the process from 26.09.2019 onwards, refund applications had to be filed electronically on the common portal along with all supporting documents.

The Portal Problem:

The petitioner tried to file afresh on the portal but couldn’t — because the earlier application was already showing as “processed” on the system, blocking a fresh filing. The Department verbally told them to raise a ticket on the helpdesk. The petitioner did raise a ticket on GSTN helpdesk on 16.03.2020, but nothing was resolved.

The Rejection:

On 21.07.2020, the 4th Respondent informed the petitioner that a Form GST RFD-06 (rejection order) had been issued — on the ground that the refund application was not submitted along with necessary supporting documents.

The petitioner hadn’t even received the rejection order! They found out about it only through this communication. Physical copies were provided only on 28.07.2020 after the petitioner sent an email on 22.07.2020.

Filing the Writ Petition:

Having exhausted other options, the petitioner filed W.P. No. 21405 of 2020 before the High Court seeking:

• Quashing of the rejection order No. VJAGSTREJ/266/2019-20 dated 27.11.2019,
• Quashing of the letter C. No. V/18/102/2020-Refunds dated 29.06.2020, and
• A direction to sanction the entire refund claim with interest under Section 54 of the CGST Act, 2017 read with Rule 89 of the CGST Rules, 2017.

Arguments

Petitioner’s Arguments:

• They had legitimately filed the refund application in Form GST RFD-01A and submitted physical documents as per the procedure in place at the time.
• The refund application was already showing as “processed” on the portal, so they could not file afresh — this was a technical issue beyond their control.
• They had raised a helpdesk ticket and tried to resolve the issue, but the Department did not help.
• The rejection was unjust because the inability to submit documents was due to a portal glitch, not negligence on their part.
• They are entitled to the refund under Section 54 of the CGST Act, 2017 read with Rule 89 of the CGST Rules, 2017.

Department’s Arguments (Respondents):

• Without documentary evidence in the hands of the jurisdictional proper officer, granting a refund — even on a provisional basis — is not tenable.
• The CBIC had clearly stated that the printout of the refund application along with all supporting documents must be submitted to the jurisdictional proper officer to process the refund.
• Even though it is a procedural requirement, supporting documents are absolutely necessary to process the refund claim.
• Without documentary evidence, the jurisdictional proper officer cannot process the refund claims.

Key Legal Precedents & Provisions

This case doesn’t cite prior court judgments as precedents, but it heavily relies on the following statutory provisions and circulars:

Section 7(5) of the IGST Act

Supplies to SEZ units are treated as inter-state supplies (attracting IGST)

Section 16(1)(b) of the IGST Act

Supplies to SEZ units are “zero-rated supplies”

Section 54 of the CGST Act, 2017

Provides for refund of taxes, including IGST paid on zero-rated supplies

Rule 89 of the CGST Rules, 2017

Prescribes the procedure for claiming refund

Form GST RFD-01A

Temporary refund application form used before the electronic module was available

Form GST RFD-06

Rejection order issued by the Department

CBIC Circular No. 125/44/2019-GST dated 18.11.2019

Changed the refund filing process to fully electronic mode from 26.09.2019

Judgment

What did the court decide?

The court disposed of the writ petition with a practical, consent-based direction. Here’s what was ordered:

1. The petitioner shall make a fresh application for the refund claim, enclosing all necessary supporting documents, in terms of Circular No. 125/44/2019-GST dated 18.11.2019 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, GST Policy Wing.

2. This fresh application must be filed within 4 weeks from the date of the order (i.e., from 07.09.2022).

3. Once the fresh application is filed, the authorities shall dispose of the same on merits and in accordance with law, as early as possible, preferably within 3 weeks thereafter.

4. No order as to costs — meaning neither party has to pay the other’s legal costs.

5. Any interlocutory applications pending in the matter shall stand closed.

The Judges: Hon’ble Sri Justice C. Praveen Kumar and Hon’ble Sri Justice A.V. Ravindra Babu

Date of Order: 07.09.2022

FAQs

Q1: Did the petitioner win or lose this case?

It’s a mixed outcome, really. The petitioner didn’t get an outright order for the refund, but the court gave them a fresh opportunity to file their refund application properly. The earlier rejection was effectively set aside by directing a fresh filing.

Q2: Why couldn’t the petitioner just re-file on the portal?

Because the earlier application was already showing as “processed” on the GST common portal, the system wouldn’t allow a fresh filing. This was a genuine technical issue. The petitioner even raised a helpdesk ticket on 16.03.2020, but it wasn’t resolved.

Q3: What is a “zero-rated supply” and why does it matter here?

A zero-rated supply means the supply is taxed at 0% GST, but the supplier can still claim a refund of the input taxes paid. Supplies to SEZ units are zero-rated under Section 16(1)(b) of the IGST Act. This is why the petitioner was entitled to a refund of the IGST they paid.

Q4: What is CBIC Circular No. 125/44/2019-GST?

This is a circular issued on 18.11.2019 by the Central Board of Indirect Taxes and Customs (CBIC) that changed the refund filing process. From 26.09.2019, taxpayers were required to file refund applications electronically on the GST common portal along with all supporting documents, instead of the earlier physical submission process.

Q5: What is Form GST RFD-06?

Form GST RFD-06 is the rejection order issued by the GST authorities when a refund claim is rejected. In this case, the Department issued this form rejecting the petitioner’s refund claim on the ground that supporting documents were not submitted.

Q6: What happens if the authorities don’t process the fresh application within 3 weeks?

The court said the authorities should dispose of the application “preferably within 3 weeks” — the word “preferably” makes this a directory (not mandatory) timeline. However, if the authorities delay unreasonably, the petitioner could potentially approach the court again.

Q7: Will the petitioner get interest on the refund?

The original writ petition sought refund with interest under Section 54 of the CGST Act, 2017. Since the court directed the authorities to dispose of the fresh application “on merits and in accordance with law”, the question of interest will be decided by the authorities when they process the fresh application.

1) Heard Sri. Bharat Raichandani, learned Counsel appearing for the Petitioner and Sri. B.V.S. Chalapathi Rao, learned Standing Counsel appearing for Respondent Nos. 3, 4 and 5.

2) The present Writ Petition came to be filed seeking issuance of a writ of Certiorari for the following reliefs:

a) Quash the impugned Order No. VJAGST- REJ/266/2019-20 dated 27.11.2019;

b) Quash the impugned letter bearing C. No. V/18/102/2020-Refunds dated 29.06.2020, and;

c) Issue a Writ of Mandamus or any other appropriate Writ, Order or Direction, directing the Respondents to sanction entire refund claim with interest to the Petitioner under the provisions of Section 54 of the CGST Act, 2017 read with Rule 89 of the CGST Rules, 2017 and to pass such other reliefs”.

3) The facts, in issue, are as under:

i. The Petitioner herein is engaged in manufacture and export

of medicaments/pharmaceuticals products, falling under

Chapter 30 of the Central Excise Tariff Act, 1985.

ii. With the introduction of Goods and Services Tax, 2017,

[‘GST’], the Petitioner migrated to the GST regime and duly

registered under the provisions of Central Goods and

Services Tax Act, 2017 [‘CGST’].

iii. In the instant case, the Petitioner supplied goods to SEZ

Units on payment of Integrated Goods and Services Tax,

2017 [‘IGST Act’], in accordance with the provisions of

Section 7(5) of the IGST Act. The supply of goods to SEZ

Unit is considered as “zero-rated supply” in terms of Section

16(1)(b) of IGST Act. The fact that the Petitioner made zero-

rated supplies and paid IGST on supplies is not in dispute.

That being the position, under section 54 of the CGST Act,

inter alia, the Petitioner is entitled for IGST paid on zero-

rated supplies.

iv. It is the case of the Petitioner that, after the roll-out of GST,

on account of non-availability of electronic refund module

on the common portal, a temporary mechanism is devised,

to initiate the process of refund effectively. Accordingly, the

Petitioner was required to file the refund application in the

Form GST RFD-01A on common portal; take a print out and

submit the same physically to the jurisdictional Tax Office

along with the documents, which the Petitioner has done

and acknowledgments to that affect were also given to the

Petitioner.

v. In the month of February, 2020, the Petitioner attempted to

submit physical documents in support of the above refund

claims with respective jurisdictional Departments. However,

the Department did not accept the documents, but informed

the Petitioner that, in the light of Circular, dated

18.11.2019, issued by CBIC, the Petitioner is required to file

refund application along with all supporting documents

electronically on common portal with effect from

26.09.2019.

vi. The Petitioner claims to have informed the Department that

since the refund application is shown as ‘processed’ and, as

such, the Petitioner could not file refund application afresh.

In response, the Department verbally informed the Petitioner

to raise ticket on helpdesk. Accordingly, a ticket was raised

on GSTN helpdesk on 16.03.2020. Correspondence between

the Department and the Petitioner took place and ultimately

nothing happened. But, however, on 21.07.2020, the 4th

Respondent informed the Petitioner that his Office has

issued Form GST RFD-06, [rejection order], on the ground of

non-submission of application for refund claim along with

necessary supporting documents.

vii. On coming to know about the same, the Petitioner herein

sent E-mail, dated 22.07.2020, informing that they have not

received physical copy of the rejection order and that the

same is also not available in the common portal. In response

to the same, physical copies of the same were furnished on

28.07.2020.

viii. Having regard to the above, the present Writ Petition came to

be filed, seeking the reliefs referred to above.

2. A counter came to be filed by Respondent Nos. 1, 3, 4 and 5

disputing the averments made in the affidavit filed in support of

the Writ Petition.

3. The relevant paragraphs in the Counter are as under:

2.5 The registered person needs to file the refund claim

with the jurisdictional tax authority to which the

taxpayer has been assigned as per the administrative

order issued in this regard by the Chief Commissioner

of Central Tax and the Commissioner of State Tax. In

case such an order has not been issued in the State,

the registered person is at liberty to apply for refund

before the Central Tax Authority or State Tax Authority

till the administrative mechanism for assigning of

taxpayers to respective authority is implemented.

However, in the later case, an undertaking is required

to be submitted stating that the claim for sanction of

refund has been made to only one of the authorities. It

is reiterated that the Central Tax Officers shall facilitate

the processing of the refund claims of all registered

persons whether or not such person was registered with

the Central Government in the earlier regime.

9. It is submitted that without having any documentary

evidence on the hands of the jurisdictional proper

officer, granting of refund on provisional basis to the

petitioner is not tenable and possible as was argued by

the petitioner. Without having the documentary

evidence supporting the refund application, the

jurisdictional proper officer cannot process the claim.

The CBIC categorically stated that the printout of the

refund application with all the supporting documents

shall be submitted to jurisdictional proper officer in

order to process the refund application. Even though it

is a procedural requirement, the supporting documents

are very much required in order to process the refund

claim. Without any documentary evidence the

jurisdictional proper officer cannot process the refund

claims”.

4. Today when the matter is taken up for hearing, both the

Counsel reiterated the averments made in the affidavit filed in

support of Writ Petition and the Counter, in support of their

arguments, and ultimately it is agreed upon that the Petitioner

herein shall make a fresh application seeking refund, in terms of

Circular No. 125/44/2019-GST, dated 18.11.2019, issued by the

Government of India, Ministry of Finance, Department of Revenue,

Central Board of Indirect Taxes and Customs, GST Policy Wing,

within a period of three [03] weeks from today.

5. Hence with the consent of both the counsel, the Writ Petition

is disposed of directing the Petitioner to make a fresh application

for refund claim enclosing necessary supporting documents in

terms of Circular No. 125/44/2019-GST, dated 18.11.2019,

issued by the Government of India, Ministry of Finance,

Department of Revenue, Central Board of Indirect Taxes and

Customs, GST Policy Wing, within a period of four [04] weeks from

today. In which event, the authorities shall dispose of the same on

merits and in accordance with law as early as possible, preferably

within a period of Three weeks thereafter.

6. With the above direction, the Writ Petition is disposed of.

No Order as to costs.

7. As a sequel, interlocutory applications, if any, pending shall

stand closed.

C. PRAVEEN KUMAR, J

A.V. RAVINDRA BABU, J

Date: 07.09.2022